Local policymakers are bracing for a severe hit from the European sovereign debt crisis on the Thai economy which largely relies on exports to fuel growth. The topic was brought up for discussion at a special cabinet meeting yesterday held to seek ways to cushion the fallout on trade, banking and finance. Governor of the Bank of Thailand (BoT) Prasarn Trairatvorakul said exports to Europe and other developed economies have begun to decline as the eurozone crisis takes its toll on import demand in other countries. He said the rise in exports in May may have been a temporary blip. The central bank expects exports to eventually decline, although it has forecast 8% growth this year from 2011. "We have started to see export orders dipping, resulting not just from the euro area crisis, but its indirect impacts. Orders from the US and China have also begun to decline," he said. Economic ministers were yesterday instructed to keep a close watch on 2,000 companies in the textile and electronics industries for possible impacts from the eurozone crisis. The firms are among those in four industries that stand to feel the biggest hit because of their labour-intensive nature. The other two industries also vulnerable to the crisis are rubber and jewellery. The special cabinet meeting was chaired by Prime Minister Yingluck Shinawatra and attended by Deputy Prime Minister Kittiratt Na-Ranong, her team of economic advisers, the central bank governor and the chief of the National Economic and Social Development Board (NESDB). The meeting was immediately followed by one between Mr Kittiratt and the economic ministers. Areepong Bhoocha-oom, permanent secretary for finance, said although the latest development in the euro crisis (Cyprus's decision to seek eurozone bailout funds) would have little impact on Thailand, the kingdom should prepare for the worst, especially in the textiles and electronics industries. There are about 2,100 textiles and electronics companies in the country and they employ large numbers of workers. Mr Kittiratt has scheduled a meeting of commerce counsellors from 43 countries where Thailand maintains 65 trade promotion offices to evaluate the effects of the crisis on the country's exports. Ms Yingluck will also chair a separate meeting with exporters on June 30. The country's exports grew by 7.7% in May from the same month last year, although exports during the first five months of the year had contracted from the year prior. Regardless, Arkhom Termpittayapaisith, secretary-general to the NESDB, said the Council of Economic Ministers would maintain its 2012 export growth target at 15%. The Commerce Ministry said it would try to seek new export markets during the latter half of the year to compensate for the decline in the first five months. Mr Arkhom said the NESDB was maintaining its GDP growth forecast of 5.5-6.5% for the year, based on government spending plans and private investments. Apichart Jongsakul, secretary-general of the Office of Agricultural Economics, said that in the first four months of this year, the export value of rubber and rubber products to Europe fell by 49% because of falling prices and orders. The government will speed up the disbursement of 15 billion baht to help shore up rubber prices. The National Policy Committee for Natural Rubber will meet next month to monitor export prospects for all agriculture products to new markets. Thai exports to Europe in May grew by 7%, while contracting 17% in the first quarter. But exports to PIIGS countries (Portugal, Italy, Ireland, Greece, Spain) fell by 19% in May from a year earlier. The Council of the Economic Ministers has instructed the Finance Ministry to monitor the situation on a daily basis. using Bank of Thailand reports to back up its information. The NESDB and BoT are required to study and recommend when the government should act to dampen impacts from the crisis.